Lawmaker: Bailout shouldn't help foreign carmakers

WASHINGTON 
Chrysler LLC should be required to return billions of dollars in government loans if Italian carmaker Fiat takes a majority stake in the company, a New Jersey senator said Thursday.

Sen. Bob Menendez, D-N.J., urged President Barack Obama to prevent the auto industry bailout from being used to help foreign automakers. The Bush administration provided Chrysler with $4 billion in federal loans earlier this month to help the company reorganize and the Auburn Hills, Mich.-based automaker is seeking another $3 billion.

Chrysler's finance arm received $1.5 billion in government loans last week.

Chrysler announced Tuesday a nonbinding agreement with Fiat in which the Turin, Italy-based carmaker would take a 35 percent stake in Chrysler in exchange for access to a lineup of more fuel-efficient cars.

Officials have said the Chrysler-Fiat deal, which is subject to regulatory approvals, could be expanded in the future to give Fiat a majority stake in Chrysler.

"I am sure you would agree that the responsible action is to ensure that American taxpayers are not financing foreign automakers," Menendez wrote.

Cerberus Capital Management LP, a New York-based private equity firm, currently owns 80.1 percent of Chrysler while Daimler AG controls 19.9 percent of the company. Daimler, based in Stuttgart, Germany, said it remains open to selling its remaining stake to Cerberus.

As the Chrysler-Fiat partnership advances, Menendez urged Obama to "address the potentiality of foreign control and require the immediate payback of the loans already dispersed should such a scenario present itself."

Chrysler's alliance with Fiat will be included in a long-term reorganization plan to the Treasury Department, due by Feb. 17. If Chrysler's plan to profitability fails to win approval from the administration, the Obama administration could call back the $4 billion in loans in late March, which would essentially force Chrysler into bankruptcy.

Stuart Schorr, a Chrysler spokesman, said the company looks "forward to addressing all questions and demonstrating how our viability plan, and the potential alliance, will preserve American jobs, expand availability of fuel efficient products, and help stabilize our domestic industry."